Sun Microsystems is back in the game

2007's No. 2 most underreported tech story

The Story: Sun Microsystems has been in and out of the (metaphorical) grave more often than Count Dracula. The one-time king of the Internet servers suffered a body blow when the dot-com bubble burst, and since then it’s been a struggle to keep the company’s name on the buy lists of enterprise IT shoppers. That struggle has been chronicled by endless stories in the trade and financial press with headlines featuring bad puns like “The Sun is setting.”

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Those days are finally, if quietly, coming to a close.

[ Slideshow: 2007's top underreported tech stories ]

In less than two years in the CEO’s chair, Jonathan Schwartz has put the company firmly in the black and, after years of bleeding, resuscitated Sun’s flagging software business and storage businesses, and put together a product road map that Morgan Stanley analyst Katherine Hubert calls its strongest in years.

“You have to credit Schwartz because he understands the way to combine hardware and software,” says Bud Mathaisel, CIO of outsourced-IT provider Achievo. “Although Sun’s image slipped from public view, they were making very competitive technology and pricing.”

Sun’s line of Galaxy and blade servers are hits across a wide swatch of businesses, and its storage business is growing. Sun has already entered the market for quad-core servers (while rival AMD’s Barcelona remains problem-plagued), and in the next year or so Sun will roll out new server, storage, and networking products. Also, Sun acquired SeeBeyond in August 2007, a $387 million buy that positions Sun to become a vendor of choice in the race to provide the integration tools needed to support enterprises’ SOA strategies.

The powerful new hardware lineup, plus the enterprise service bus that came with SeeBeyond once again makes Sun core to the datacenter.

Not all of the credit goes to Schwartz, of course. His predecessor, cofounder Scott McNealy, poured hundreds of millions into R&D in the dark days of 2002 and created the UltraSparc T1 (or Niagara), the server chip that’s keeping Sun competitive with larger rivals IBM, HP, and Dell.

What’s more, McNealy had the foresight to bring back hardware wizard Andy Bechtolsheim in 2004. Bechtolsheim led Sun efforts to design the AMD Opteron-based Sun Fire x64 servers — better known by their code name “Galaxy” — that were key to Sun’s datacenter reentry.

The Bottom Line: Sun’s transition from leader to laggard and back to contender has been very painful, particularly because of the deeps cuts in personnel Sun has been forced to make. But the numbers — four profitable quarters in a row plus record margins — as well as a growing list of wins, point to a company on the upswing. Sun may not be at the top of everybody’s vendor list, but once again, it’s worth your consideration.

Complete list of 2007 underreported tech stories:
1.  Java is becoming the new Cobol
2.  Sun Microsystems is back in the game
3.  Hackers take aim at Mac OS X
4.  There are some threats you can worry less about
5.  Companies may have found a way around H-1B visa limits
6.  Open source’s new commercial strategy
7.  End-to-end Ethernet finally arrives
8.  Blade servers arrive for the masses
9.  BI is dead; long live BI
10. Balance of power shifts to software buyers

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